Private wealth is having a growing influence in sustainability in Singapore and Hong Kong, with COVID-19 having increased the motivation of Hongkongers and Singaporeans towards responsible investing, according to a new study by St. James's Place Wealth Management Asia (SJP Asia).
The study is based on a survey of approximately 2,000 affluent to high net worth investors across Hong Kong and Singapore conducted in February and March 2021.
Across the board, 63% of respondents said that ESG and sustainability are now important factors in how they select investments, with this rising to 71% for Hongkongers in the higher income bracket of HK$1m ($128,673) and above per annum.
In Hong Kong and Singapore, close to two-thirds (64%) also said they actively seek this information before investing.
The importance of ESG factors in investment decisions, is significantly higher for that of younger investors (25-34 years, 67%), as compared to older investors (45+ years, 60%) in Singapore.
Additionally, 43% of respondents said they are prepared to actively divest from companies that do not operate sustainably.
“COVID-19 has spotlighted many of the critical sustainability issues we face and motivated investors to play a role with how and where they invest. There is a tremendous opportunity for private wealth to play a growing role in driving forward sustainability agendas in Asia and globally,” said SJP Singapore CEO Gary Harvey.
Barriers to responsible investment remain
Despite increased interest in sustainable investing, the study also revealed significant barriers.
More than half (54%) believe they need to compromise returns to invest responsibly, with 42% expressing that concerns over the performance of sustainable investments are a key barrier preventing them from investing more responsibly.
Other key barriers for investing more responsibly include a lack of knowledge (48%), difficulty in accessing knowledge (43%) as well as a lack of sustainable investment options (37%).
This underscores a growing need to bridge the intention-action gap through credible financial advice, considering how 87% of investors in Hong Kong and Singapore have highlighted a demand for better financial advice and knowledge in investments. Independent financial advisers are also among the top sources of advice for 40% of Singaporeans and 37% of Hongkongers.
Closing this gap will require financial advisers to have the necessary skills and understanding of integrating ESG considerations in investment decisions and when advising clients as a first step to ensure that the long-term interests of investors are protected and maximised.